Denmark Taxes Butter And Fat, But Will It Work?

Denmark, the land of luscious lardy pork ribs and those famous blue butter cookie tins, is not known for having a major obesity problem. In fact, Danes are among the thinnest people in Europe and beyond. (Most obese? Us. About one-third of us. Us — as in people of the U.S.)

So when the tiny Scandinavian country announced it would be imposing a 16 Kroner (about $3 U.S.) tax on every kilogram of saturated fat as a way to discourage poor eating habits and raise revenue, we were left scratching our heads.

How's that going to work?

Ole Linnet Juul, food director at Denmark's Confederation of Industries, tellsThe Washington Post that the tax will increase the price of a burger by around $0.15 and raise the price of a small package of butter by around $0.40.

Our pals over at Planet Money took a stab last year at explaining the economics of our version of the fat tax — the soda tax. They conclude that price increases do drive down demand somewhat.

But couldn't Danes just easily sneak over to neighboring Sweden for butter and oil and simply avoid paying the tax, throwing all revenue calculations off?

Other, fatter countries are watching Denmark's fat tax move closely. Take the UK, which weighs in at third-most obese, behind us and Mexico.

Tam Fry of the National Obesity ForumtellsThe Guardian: "It is not a question of whether we should follow the Danes' lead – we have to. If we don't do anything about it, by 2050, 70 percent of the British population will be obese or overweight," he says.

Tune in a little later today when All Things Considered Host Guy Raz talks with Danish business reporter Jakob Sorgenfri Kjaer of the newspaper Politiken about his country's reaction to the new law.

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GUY RAZ, Host:

We all know that fatty foods can add inches to your waistline. Now in Denmark, they'll also lighten your wallet. This weekend, a so-called fat tax went into effect there. The tax charges an extra 16 Kroner - or about $3 - for every kilogram of saturated fat. Butter, oils, sweets - Danes are paying more for all of them now. The government hopes costlier junk food will lead to better Danish diets and to a bump in tax revenue. For more on the new tax, we're joined by Jakob Sorgenfri Kjaer. He's a business reporter for the Danish newspaper Politiken. Jakob, welcome to the program.

JAKOB SORGENFRI KJAER: Thanks.

RAZ: How did this tax come to be? Where did the idea come from?

SORGENFRI KJAER: Well, it's been in discussion for some time now. What can you do to basically improve public health? And we've seen before a small increase on some sorts of fats but this one is by far the most intense fat scheme that we've seen.

RAZ: You say response to public health. Is obesity a problem in Denmark?

SORGENFRI KJAER: Not in comparison to other countries. For instance, in the U.S., one-third is suffering from obesity; and in Denmark it's one out of 10. So, it's not, in comparison to other countries, a big issue. Then again, if you look at the prospect, then it will grow to become a substantial problem.

RAZ: So, give me a sense, say, of the price of a package of butter on Friday versus a package of butter today now that tax is in place.

SORGENFRI KJAER: That would be, like, local currency, like two Kroners, saying pretty much 50 cents. So, it doesn't sound like a lot, but then again I just came back from a local grocery and it's 800 products right there that needed to change price labels. That's why we've seen that people have been hoarded butter, bacon, milk, cookies and pre-cooked foods the past month. We've talked to some of the local food producers saying that will they increase their sale by 50, 60 percent just in September because, well, people just basically cued up to get their favorite products at a cheaper price.

RAZ: So, this can add something like 10 to 15 percent on top of the average grocery bill now in Denmark, right?

SORGENFRI KJAER: Well, if people continue their habits of buying the same products. But then again, the whole concept of this new legislation is that people should change their habits. We have a new center-left government coming into place today and they started off by saying, well, we're going to continue this focus on public health through taxes. So, this is definitely a development that's here to stay.

RAZ: But I do understand that some crafty Danes are driving over the border to neighboring Sweden and Germany to get their fats tax-free, right?

SORGENFRI KJAER: That's a big issue for the government. They need to look into how can we try to make the Danes live, you know, more healthy. But the risk is, of course, that people, they travel one hour, two hours down to Germany or to Sweden and then they just buy all their groceries there and that makes no taxes coming into the Danish government. So, you need to balance it and that's the whole discussion here.

RAZ: That's Jakob Sorgenfri Kjaer. He's a business reporter for the Danish newspaper Politiken, talking about the new so-called fat tax in Denmark. Jakob, thanks.